The Tennessee Housing Development Agency (THDA) supports affordable housing through the federal Low-Income Housing Tax Credit (LIHTC) program. This credit incentivizes developers and investors by offering annual credits against federal tax liability for up to ten years. These credits make it financially viable to construct or rehabilitate properties with rent and income restrictions, ensuring they remain affordable long-term.
Keep reading to learn more about LIHTC benefits with Bacar Constructors!
How THDA LIHTC Works
Application & Allocation
Developers apply through THDA under competitive Qualified Allocation Plans (QAPs). Those accepted receive credits based on project costs and compliance with income targeting.
Financing the Project
Credits are sold to investors, generating upfront capital. This lowers the project’s debt burden and allows for affordable rents.
Compliance & Affordability Period
Properties must keep a set percentage of units (e.g., 40% at ≤ 60% AMI) rent-restricted for at least 30 years. THDA monitors income levels, rent, and physical standards regularly.
Benefits for Tenants and Communities
- Lower, stable rents: Since debt burdens are reduced, rents remain affordable; often 30% or less of income.
- Quality housing stock: Projects are built or renovated to THDA’s standards, ensuring safe, energy-efficient environments.
- Long-term security: Income and rent restrictions last 30+ years, plus protective covenants.
- Community impact: These developments support local revitalization, generate jobs, and stabilize neighborhoods.
Finding a THDA Tax Credit Apartment
- Search listings: Use TNHousingSearch.org or HUD’s Tennessee LIHTC property lists.
- Check eligibility: Income and household size determine which units you can access.
- Apply early: There can be long waitlists, and high-demand properties fill quickly.
- Tour and lease: Once approved, you’ll complete inspections, sign the lease, and move in.
Tips for Prospective Renters
- Track upcoming developments through THDA’s QAP announcements.
- Stay prepared with necessary documents.
- Explore financial assistance programs like Section 8 or utility support to complement rent.
- Visit in person to assess community amenities and maintenance standards.
Why Developers Choose THDA LIHTC
- Economic feasibility: Credits can make projects financially viable that would otherwise fall short.
- Reliable financing: Combining credits with bond programs offers strong capital support.
- Positive legacy: These projects leave a long-term positive impact, strengthening communities.
Challenges and Considerations
- High compliance requirements: Long-term monitoring, inspections, and adherence to QAP rules can be complex.
- Competitive process: Demand often exceeds available credit. Strong planning and team credentials are essential.
- Market constraints: Rents are capped, limiting profit potential compared to conventional developments.
Bacar Constructors: Building Quality THDA LIHTC Projects
Bacar Constructors has extensive experience in THDA tax credit developments. For example:
Watson Glades Place – Gatlinburg, TN
- 80-unit multifamily development in scenic Gatlinburg
- Built to high-quality standards following local needs
Ben Allen Ridge – Nashville, TN
- 238-unit community under construction for The Clear Blue Company
- Features include greenways, walking trails, and fitness stations
Birchstone Village – Gallatin, TN
- 228-unit multifamily community for First Cumberland Properties
- Amenities include a clubhouse with commercial kitchen & classrooms, splash pad, sports court, playground
Wanna see more? Explore our expansive portfolio of THDA tax credit projects!
THDA tax credit apartments represent a powerful tool in creating long-term, high-quality affordable housing in Tennessee. They balance economic incentives for developers with real housing affordability for residents. Our expertise is in delivering high-quality, compliant projects. If you’re a developer planning a LIHTC community, Bacar offers:
- A track record across diverse, complex builds.
- LIHTC-specific compliance know-how to meet THDA’s long-term requirements.
- Supportive partnership from initial planning to final inspections.
Ready to discuss your project? Call 615-259-1519 or visit us at Bacar Constructors to bring your vision to reality!